How is curiosity earnings from KVPs taxed?

I purchased Kisan Vikas Patra (KVP)  price ₹20 lakh a number of years in the past. Since its curiosity is payable on maturity and there’s no TDS deduction yearly or on maturity. I’ve been mentioning accrued curiosity yearly in my ITR and paying tax on it, however on the time of maturity when complete curiosity will probably be proven in my AIS and/or in 26AS, how will I point out that I’ve already paid the tax on KVP curiosity within the earlier years?

                                     —Dolly Moga

It is assumed that you’re not required to keep up and get the books of accounts audited underneath the provisions of the Income-tax Act, 1961. Section 145 of the act gives for taxation of earnings from different sources (like curiosity) in accordance with both money or mercantile system of accounting repeatedly employed by the assessee. Hence, if money foundation is repeatedly adopted, curiosity from KVP could also be provided to tax within the yr of its maturity. If mercantile foundation is repeatedly adopted, curiosity ought to be provided to tax yearly on an accrual foundation.

Since you could have opted to supply tax on mercantile foundation, in case of any inquiry by the tax division in view of the mismatch of the curiosity earnings showing within the AIS within the yr of maturity and the curiosity earnings provided to tax, the identical could also be defined earlier than the tax officer on the premise of reconciliation of the accrued quantity provided to tax in previous years’ tax return and different documentary proof.

It could also be individually famous that as per the present provisions of Section 194A of the Act, on maturity of the KVP, no taxes are required to be deducted on the curiosity earnings. Hence, tax due (if any) shall be required to be paid by means of self-assessment tax / advance tax (as relevant).

I maintain 400 choice shares of IL&FS ltd. I’ve not obtained any dividend previously 4 years owing to the corporate’s monetary points and there’s no hope of its revival. Can I write off the entire buy worth of ₹50 lakh as long-term capital loss and modify the identical towards the capital acquire for the related evaluation yr?

                            —Shirish S. Shah

As per the provisions of the Income-tax Act, 1961, any earnings or beneficial properties (together with loss, if any) arising from the switch of capital asset shall be chargeable to earnings tax underneath the pinnacle ‘capital gain’ and shall be deemed to be the earnings of the monetary yr by which such switch occurred. Further, the time period ‘transfer’ in relation to a capital asset (shares in your case) contains sale, trade, relinquishment of the asset, extinguishment of rights therein. We perceive that you simply proceed to carry such shares and the identical haven’t but been cancelled / written off by the corporate or every other order. No relinquishment of the asset or any extinguishment of rights therein has taken place. Thus, there isn’t a switch of the capital asset and therefore you shall not be eligible to assert any set-off of long run capital loss by writing off the identical within the books at your finish. The identical may be assessed to capital acquire or loss solely within the yr by which the shares are transferred.

Parizad Sirwalla is associate and head, world mobility providers, tax at KPMG in India.

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